Big Banks Report Great Profits, Less Lending

With the Wall Street banks reporting large quarterly profits and being the stock market yeast for the day, their reports show that those profits come from “trading” and “investment banking” — securities speculation with the huge additional reserves and deposits the Federal Reserve has given them. The Fed’s latest flow-of-funds report shows that compared to the end of March 2020, the U.S. banks at the end of March 2021 had $100 billion less in loans and leases out to the economy despite $2.82 trillion more in deposits and $2 trillion more in total assets. The banks’ ratio of loans and leases to deposits had dropped dramatically during the year from 75% to 61%. By contrast the banks’ securities holdings had risen by $1 trillion, or 23% during the year.